The Patent Office solicited comments on its July 2015 Update on Subject Matter Eligibility (Section 101), and 30 comments were submitted in late October and are available on the PTO’s website. Comments here. Ninety percent of the commenters have suggested that the PTO examiners are issuing “abstract idea” Section 101 rejections of patent applications, using Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2356 (2014), too aggressively or too haphazardly or arbitrarily. The same result happened with comments received before the Guidance. Earlier comments here.
A common thread is the lack of constraint on examiners in making Alice-type rejections, particularly in computer and business-method arts, and the lack of consistency and predictability in this area. There is a widespread concomitant concern that Section 101 can be easily applied to prevent patents from issuing in wide swaths of technology. I share those concerns. Most recent Hoffman comment to PTO here.
I have spoken in the last several months to a number of experienced examiners who are tasked with making (or declining to make) Section 101 rejections. One common examiner remark is that, despite the Section 101 training and the July 2015 Guidance Update, PTO material still gives examiners the opening to make rejections any time they want to do so. Examiners say that they can always find some language in the PTO explanations, categories, or examples, which they can apply or analogize to virtually any claim an applicant wishes to patent.
The results are that patent allowance rates have plummeted, particularly in Group 3600, which examines nearly all computer-related or Internet-related inventions, as several recent published articles have shown statistically, both at the Board level and in the examining corps. E.g., wonderland-statistics-alice. I have heard several high-ranking PTO officials say that the high rejection rate might be temporary. They reason that it is understandable that there would be many rejections of patents challenged at the Board through CBM procedures that contain claims written pre-Alice, plus the “bad patents” would likely be challenged first. Likewise, there could be many examiner rejections of applications first written pre-Alice.
But the rejection rate shows no sign of slacking, so that explanation doesn’t really fly. A more cogent reason for low allowance is that the Office’s training materials provide little discipline or explanation of circumstances in which an examiner should not make a 101 rejection. Coupled with supervisor focus on not “missing” a proper Alice-type rejection, the cautious examiner can be expected to make rejections wholesale, and “stick” to rejections more often than not.
It is poor patent policy to have broad areas of technology deemed patent-ineligible entirely, or ineligible without the high cost of attorney time to argue, and likely appeal, amorphous Alice-type rejections. This is particularly so as to technology that is central to the United States economy. Invention is central to U.S. economic might, and as our economy moves away from the “old line” manufacturing strength of the past, the U.S. has become especially strong in fields dependent on software technology and business methods. Strengths of the current U.S. economy include social media, the Internet, and the service economy, especially financial services. We are also strong in biotech. Yet those are precisely the fields most heavily damaged by Section 101 Alice-type rejections.
Some people working in the “software” field believe that patents should not issue at all, categorically, in that area. Most reasonable observers with strong knowledge of the patent system disagree with that philosophy. It is not the purpose of this series to convince the skeptics to change their minds about “software patents” generally. If we start from the presumption that Congress and the Courts have decided against banning this (or other) patents categorically, though, then it follows that the task of the PTO is to judge which patent claims are eligible and which are not. Few would disagree with the goals of predictability and internal logic in making such decisions.
The Courts, even while issuing decisions against patent eligibility, have recognized the danger of overuse of Section 101 rejections. See, e.g., Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2356 (2014) (abstract idea exception would “swallow all of patent law” if it were interpreted too simplistically), aff’g CLS Bank Int’l v. Alice Corp. Pty. Ltd., 717 F.3d 1269, 1313 (Fed. Cir. 2013) (Moore, J., dissenting in part) (worrying that overbroad application of Alice could cause “the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents”).
Despite a difficult string of court decisions, therefore, the PTO should not “go overboard” in allowing its examiners to make rejections beyond what the courts require. Allowing excessive Alice-type rejections amounts to a “give away” to the public domain of U.S. technology that could be protected, and that is particularly damaging because it is happening preferentially in the very fields of U.S. economic strength.
I hope to provide separately specific explanations of why the PTO, despite the guidance and updates, still does not have the Alice problem under control, especially as to the “abstract ideas” rejections in the computer and Internet fields, where problems most strongly exist.
I hope that the PTO takes seriously the need to rein in the examining corps’ over-use of Section 101 rejections via further revisions and clarifications of meaning of its Updated Guidance. The guidance provided examiners can be improved so that it is not so easily viewed as a Rorschach test allowing support for rejections in all circumstances. Getting control of the problem of inconsistent and over-aggressive rejection, arising from amorphous instructions about the Section 101 test, represents good patent policy and will benefit the U.S. economy.